Gold and silver poised for sixth straight higher weekly closes

Outside Market Developments: Headline PCE inflation ticked up to 2.7% y/y in August, while core inflation was unchanged at 2.9%. With the Fed's favored measure of inflation still nearly a full percentage point above the Fed's 2% target, sticky inflation remains a market concern with implications for the Fed's policy path.

Personal income and expenditures beat expectations. On Thursday, it was reported that the U.S. economy grew at a revised 3.8% annualized rate in Q2, its fastest pace in nearly two years, driven by strong consumer spending and business investment. Durable orders beat expectations by a wide margin.

These data reflect a resilient and robust economy, with above-target but stable inflation. The market has modestly pared its dovish Fed expectations as a result.  Prospects for a 25 bps cut in October stand at 87.7%, with the probability of another in December at 63.6%.

No progress has been made this week on averting a partial government shutdown that would begin on October 1. A last-ditch Senate vote on September 29 is possible, but the chances of a CR are slim with both Democrats and Republicans unwilling to make concessions. Without a CR to fund the government, markets and federal operations face immediate turbulence.

Personal Income rose 0.4% in August, above expectations of +0.3%, versus +0.4% in July.

PCE rose 0.6% in August, above expectations of +0.5%, versus +0.5% in July.

PCE Chain Price Index rose 0.3% in August, in line with expectations, versus +0.2% un July; 2.7% y/y, versus 2.6% in July. Core +0.2% m/m, in line, versus +0.2% in July; 2.9% y/y, unchanged from July.

Michigan Sentiment was revised down to 55.1 in the final reading for September, versus 55.4 previously and 58.2 in August.


GOLD

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$4.73 (-0.13%)
5-Day Change: +$78.42 (+2.13%)
YTD Range: $2,607.16 - $3,790.90
52-Week Range: $2,541.42 - $3,790.90
Weighted Alpha: +45.56

Gold heads into the weekend on the bid and within striking distance of the $3,790.90 record high set on Tuesday. The yellow metal is poised for a sixth consecutive higher weekly close.



Haven interest remains strong with the U.S. seemingly hurdling toward a partial government shutdown. Geopolitical tensions, sticky inflation, and expectations of further Fed easing are contributing factors.

The modest rebound in the dollar stemming from this week's strong U.S. economic data poses a bit of a headwind for gold. However, the dollar index set a more than three-year low last week, and gains are likely to be viewed as selling opportunities as long as Fed expectations are tilted dovish.

Short-term focus remains on a true test of the $3,800, with scope for an eventual push to $4,000. Further out, $5,000 is looking increasingly attractive.

Today's intraday low $3,734.87 now protects the $3,722.51/17.65 level. The low for the week set on Monday at $3,684.09 looks well protected and will likely correspond with the rising 20-day MA next week. 


SILVER

OVERNIGHT CHANGE THROUGH 6:00 AM CT: -$0.156 (-0.35%)
5-Day Change: +$2.477 (+5.75%)
YTD Range: $28.565 - $45.583
52-Week Range: $28.565 - $45.583
Weighted Alpha: +56.74

Silver continues its march higher, spurred by robust U.S. economic data, expectations of further Fed easing, strong supply/demand fundamentals, and a bullish technical picture. The white metal notched another round of new 14-year highs and is poised for a sixth straight higher weekly close.



The convincing breach of $45 sparked follow-through buying that pushed silver above $46 for the first time since May 2011. Today's upside extension lends additional confidence to previously established objectives at $47.973 (Fibonacci) and $48.105 (May 2011 high). Further out, record highs around $50 are looking increasingly attractive.

The $45 zone is now the first meaningful support. Today's Asian low at $44.611 stands in front of congestion around $44.

PGMs

Platinum surged to 12-year highs near $1,600, spurred by a persistent supply-demand imbalance, amplified by investor shifts and industrial resilience. Unlike gold's purely safe-haven appeal, platinum benefits from its dual role in investment and manufacturing, particularly autos and green tech.

Palladium traded above $1,300 for the first time since late July, buoyed by broad-based strength in the precious metals complex. While long-term forecasts of surpluses from recycling and substitution keep XPD underperforming, near-term market tightness – exacerbated by Russia's 40% share of global supply – has sparked bullish positioning.


Peter A. Grant
Vice President, Senior Metals Strategist
Zaner Metals LLC
312-549-9986 Direct/Text
[email protected]
www.zanermetals.com

Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete, and/or up-to-date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Metals LLC unless otherwise expressly noted.